In ancient Greek tragedy, there was always a point where events took a turn for the worse. Things seemed to be going well, the hero was on his way up, and then, poof, it was gone. Mayhem and misfortune followed.

Investors these days might be wondering if they haven’t reached that inflection point, too.

This isn’t just because of Greece’s “No” vote last weekend, which should not have surprised global investors. Greeks have suffered through years of austerity with little sign it was helping the country or millions of citizens pay their bills.

For the 61 per cent of Greeks who voted to reject the creditor offer presented to them by Prime Minister Alex Tsipras — although never structured as a formal offer by the creditors themselves — it must have been a simple case of “What have we got to lose?”

Of course, they stand to lose quite a bit in terms of jobs, exports, public safety and membership in the eurozone, but they preserved one thing, at least: pride.

Like the man says, pride and a buck-fifty will buy you a cup of coffee.

Given the amount of attention paid to the Greek crisis, stock market reaction to the referendum result was notably muted. Global markets on Monday were down, but there was no rout.

There is uncertainty and continuing fear of a Greek contagion spilling over into other debt-burdened euro economies such as Spain and Italy. But European authorities have been adamant that they have sufficient guardrails in place to prevent a spread of ill confidence. Whatever fear remains of a near-term disaster for Europe has probably already been priced into the market.

Yet Greece is only part of a troubling landscape for investors, particularly commodities investors.

In China, stock prices on the Shanghai and Shenzhen exchanges have been plummeting. More than US$3 trillion in market cap has disappeared from Chinese markets in less than three weeks — about a 25 per cent fall. For comparison, Greece’s gross domestic product in 2014 was a third of that. For another comparison, the losses in China are 1.8 times bigger than the total market cap of all the companies on the S&P/TSX composite index.

Millions became richer; now millions are getting poorer

Chinese stocks were bound to fall. Even though China’s economy has been stalling, prices until recently had surged, with Shanghai notching a one-year gain as of June of better than 150 per cent. The government supported the escalation by easing margin restrictions, among other initiatives.

Now the bubble has burst, as it inevitably had to, and for about as much reason (or lack thereof) as it had for inflating in the first place.

The good news about all this is that foreign ownership of Chinese-listed shares is very low. The bad news is that market participation by Chinese retail investors is very high.

The important thing to know about China’s markets is that retail investors participate in them big time, and more have been piling in this year to catch a piece of the speculation. Millions became richer; now millions are getting poorer.

This is a problem for the Chinese government, which has been plowing billions into markets in a so-far-futile attempt to stop the bleeding.

Think of it this way: China’s new great economic project is to foster domestic demand, which means getting consumers to spend. To do that, they need to feel they have disposable income and wealth. For many investors, that feeling just evaporated.

Consumer spending growth has been a rare bright spot in the Chinese economic story, and a sign that the government’s program was working. But what’s going to happen when a stock-market crash wipes out their net worth?

It’s not good. Shattered consumer confidence could put a further damper on Chinese growth, which means even further reduced demand for commodities. And that’s not good for Canada, eh?

The outlook for the price of one very important Canadian commodity — oil — also just got a whole lot murkier. Iran and the Western powers seem to be approaching a deal on Iranian nukes. If that happens, it could eventually unleash yet another wave of supply.

At the same time, Saudi Arabia seems to be in no hurry to cut production, and there are signs that U.S. producers, which had taken to the sidelines (slowly) after the oil price shock, have been lured back into the game.

Last week, the number of oil-drilling rigs in the U.S. rose for the first time in more than half a year – adding to the bearish pressure on a market that is already oversupplied by as much as two million barrels per day.

There’s another challenge to oil prices: Greece. Jitters in Europe are likely to fuel a flight to quality in bond markets, meaning investors will buy up U.S. Treasuries. That will push up the greenback. Oil is priced in U.S. dollars. Get the picture?

Add it all up, and we’re looking at a turning of events for the worse.

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